Our team of futurists highlight an interesting phenomenon (or scenario) each week.
Cryptocurrencies
Type: Strengthening
Timestamp: 2022-2024
Crowdsourced timestamp: 2023
Cryptocurrency is a virtual currency based on cryptography. Cryptocurrencies use blockchain or other distributed ledger technologies, meaning that the control of the cryptocurrency has been decentralised to the entire community using it. There are over 2,000 new cryptocurrencies, and new currencies appear on the market all the time. In the likeliest scenario, cryptocurrencies will be adopted more broadly as more countries streamline the implementation of more robust regulatory frameworks.
What future do cryptocurrencies have after the fall of FTX? | Inside Story, Al Jazeera English
Background
In the same way as state-issued currencies, cryptocurrencies are also generally fiat currencies, as they are not backed by any commodity such as gold or silver and derive their value solely from the trust that people place in them. You can get cryptocurrencies by either buying them from the market or, in some cases, by mining them. In mining, part of the computing power of the miner’s computer is used to process currency transactions. As a reward, mining generates new currency with a pre-determined speed.
When it comes to the role of the national state, the arrival of cryptocurrency marks one of the most significant shifts in history. With it, a new kind of world came into existence – a world where nation states no longer control all the currencies in the world. Some experts think that in the future, cryptocurrencies can even potentially challenge the traditional, state-controlled currencies as the primary token of exchange. The strengths of the cryptocurrency Bitcoin, for instance, are considered to be its independence from market rates and the fact that it is not possible to quickly create new bitcoins. Bitcoins can also be moved from one country to another effortlessly, quickly and almost for free, and the exchanges are secured by blockchain technology.
The Russo-Ukrainian war in 2022 is the first significant conflict in which cryptocurrency has come into focus. There has been a surge in demand for cryptocurrencies from the Russian and Ukrainian people, while only a tiny fraction of the people are using them. For example, Russian elites have liquidated crypto in the UAE as they have rushed to put their fortunes into safe havens. Cryptocurrency has also been used for humanitarian purposes, with the Ukrainian government and non-governmental organisations raising money in crypto donations from all over the world. In a country at war, where the national bank is not fully functioning, crypto can help perform very fast transfers, disbursing the donated funds quickly.
Yet, many authorities tend to view cryptocurrencies as problematic, mostly because of potential issues with money laundering and income tax. In many countries, tax authorities have already taken measures to start taxing cryptocurrency earnings. It is becoming increasingly common for the authorities to make cryptocurrency earnings taxable as capital gains as soon as the virtual assets are realised.
Cryptocurrencies are also used for criminal activities. The issue for the criminals is, at least with Bitcoin, that the currency is easy to track and therefore, the criminal is easy to locate. This has led to a need for laundering cryptocurrency acquired by criminal means. The so-called mixers or tumblers offer a service that does this. They mix the funds with others for a fee, obscuring their origins. Another solution is to use the dirty cryptocurrency to trade in an unregulated cryptocurrency market to try and cover the origin of the funds by making many transactions.
As cryptocurrencies have now become widespread, the subsequent fraudulent activity is also here to stay. Professional-looking websites are built to attract potential investors online, promising fast and high returns for people investing in their cryptocurrency. In reality, there is no currency and the fraudsters run away with the investors’ money. Hundreds of such fraud companies are known to operate from Tel Aviv, Israel. In 2019, cryptocurrency-related crimes were estimated to surge as much as 4.5 billion dollars.
Some larger, established organisations have also taken an interest in cryptocurrency. For example, Meta Platforms, previously known as Facebook, launched a cryptocurrency project to bring its own cryptocurrency, Diem, to the market. However, the project came to an end due to intense regulatory pressure.
To curb the growing power of private cryptocurrencies and safeguard monetary policies, many central banks are also considering issuing their own digital currencies. Although the concept is directly inspired by cryptocurrency, central bank digital currencies (CBDCs) are centrally controlled, and they do not necessarily use blockchain. While many countries are still in the early phases of research, China began the trial of its digital yuan in selected cities and stores in April 2020.
Impacts
Stem cell therapy has transformative impacts on the medical field, primarily through its potential to treat and even cure a wide array of diseases that were once thought incurable. For example, stem cell therapy could bring promising new treatment options for heart failure patients, potentially restoring damaged heart muscles while mitigating side effects. It could also provide potential treatments for cancers of all types by making cancer cells become normal cells. Moreover, the combination of stem cell technology and genome editing holds great promise in treating severe inherited diseases that currently lack a cure. While the journey from basic research to patient care is a lengthy one, it is highly likely that we will witness new treatment options in the future.
The remarkable introduction of innovative technologies like the CellQualia™ Intelligent Cell Processing System could also make stem cell therapies safer, more cost-effective, and more widely available. Current treatments for degenerative diseases often aim to limit the extent of damage rather than fixing the damage that has already occurred. However, this innovative new robot that produces stem cells, under rigorous testing by the UK's Medicines and Healthcare products Regulatory Agency (MHRA), might alter this approach by replacing cells that have been damaged or lost. This technology could transform the lives of countless individuals, particularly those suffering from Parkinson's disease and other severe conditions.
Additional information
- Richard Holden, “BEZOS BUCKS? GET READY FOR CORPORATE DIGITAL CURRENCY”. IEEE Spectrum. https://spectrum.ieee.org/private-digital-currency
- Gillian Tett, “Crypto’s future may be divided, not dead”. Financial Times. https://www.ft.com/content/b2b60629-953c-4fd8-bebf-2a0c78ecfe4b
- Ben Caselin, “Ukraine war is crypto's biggest test yet”. Nikkei Asia. https://asia.nikkei.com/Opinion/Ukraine-war-is-crypto-s-biggest-test-yet
- Mike Swigunski, “How Cryptocurrency Will Transform The Future Business Forever”. Forbes. https://www.forbes.com/sites/mikeswigunski/2021/04/17/how-cryptocurrency-will-transform-the-future-business-forever/?sh=5a9422dd4368
- Aleksi Grym, “Getting Real about Central Bank Digital Currency (CBDC)”. CashEssentials. https://cashessentials.org/getting-real-about-central-bank-digital-currency-cbdc/
- "Why untraceable cryptocurrencies are here to stay". Tech Xplore. https://techxplore.com/news/2020-11-untraceable-cryptocurrencies.html
- Viktoria Dijakovic, “Fall of cryptocurrencies, rise of e-fiat currency?”. CashEssentials. https://cashessentials.org/news/what-future-for-cryptocurrencies/
History and major changes of this phenomenon:
Related scenarios
- Cryptocurrencies: Private Crypto's Trajectory Shifting Upwards
- Cryptocurrencies: Private Cryptos Are Mostly Banned but Public Cryptos Go Mainstream